NEC & Hitachi Establish Joint Venture DRAM Company
TOKYO November 29th, 1999 - NEC Corporation (NEC) (NASDAQ: NIPNY) (FTSE: 6701q.l) and Hitachi, Ltd. (Hitachi) (NYSE: HIT) today signed an agreement to form a joint venture DRAM company at the end of December 1999 to be called "NEC-Hitachi Memory, Inc." (NEC-Hitachi Memory). Operations are slated to begin from April 2000.
With its president from NEC and executive vice president from Hitachi, the company will have an initial paid-in capital of 500 million Yen, that is planned to be increased to 2 billion Yen at the end of March 2000 contributed equally by the two partners. NEC-Hitachi Memory will be headquartered in central Tokyo and have a development and trial production center located on the grounds of NEC's Sagamihara plant in western Tokyo.
Heading the new company as representative directors will be Kenji Tokuyama as President (currently Vice President and Executive General Manager of NEC's LSI Memory Operations Unit), and Tokumasa Yasui as Executive Vice President (currently General Manager for Memory Operations at Hitachi's Semiconductor and Integrated Circuits group). By April 2000, the new company will have approximately 200 employees and this number is expected to expand to between 600-700 people by April 2001. The staff will come from both NEC and Hitachi.
The new company's first task will be to conduct joint development of NEC and Hitachi's leading-edge DRAM products. Development will start with the 256Mb and 512Mb DRAM generations based on 0.13-micron process technology to be ready as product in fiscal year 2001 (year ending March 31, 2002). The new company will also develop its sales organization with the aim of integrating sales operations at the joint venture company by the end of 2000 under a joint brand encompassing existing NEC and Hitachi DRAM products as well as those developed by the new company.
The main DRAM production centers at NEC and Hitachi, NEC Hiroshima and Hitachi Nippon Steel Semiconductor Singapore, will integrate their production capabilities to provide foundry services to the new firm, whilst production capacity at other NEC and Hitachi fabs will also be made available. Through these measures, NEC-Hitachi Memory, Inc. will have integrated development, sales and production operations.
NEC and Hitachi initially agreed to broad cooperation in their DRAM businesses and a tie-up in June 1999. The establishment of a new DRAM joint-venture company based on today's signing of a contract between the two companies, is expected to be implemented quickly and form the basis for a new, strengthened presence in the worldwide DRAM market.
The new firm will bring together the best technology from both NEC and Hitachi that will not only result in more technically advanced products, but also in more rapid development. Through the anticipated synergies between the companies, more rapid introduction of shrink versions and circuit innovations are expected to reduce chip area size resulting in greater product competitiveness. Moreover, with joint branding, DRAM products are also expected to achieve greater presence in the marketplace to ensure the firm takes the leading DRAM market share.
Through their new joint venture company, NEC and Hitachi are staking their claim to leadership of the worldwide DRAM market based on the increased competitiveness that the new company is expected to achieve through its products, technology and services.